Commentary on how China and the world are adapting to each other -- or not.

Global Governance

June 06, 2014

The FT's Philip Stephens, in an essay published yesterday, claim that Xi & Putin are "contesting the established world order. " This is an increasingly common take on Russia and China's aggressive approach to their respective border disputes (Crimea, the South China Sea, Senkaku/Diaoyutai, etc.). But I think it's folly and the height of arrogance to portray the US's disagrements with Russia and China as one of a disagreement about the basic rules of the international system.

The first point is to note that Russia and China are acting in highly assertive ways and using coercion to press pursue their territorial interests, but that Russia is being much more aggressive than China, openly challenging and sending troops across existing international borders. Russia's annexation of Crimea and its destabiliization of a sovereign Ukranian regime differ substantially from China's brusk behavior against Philippine and Vietnamese vessels or its placing an oil rig in waters claimed by Vietnam. China would not only have to clearly identify these waters as sovereign Chinese territory but patrol the waters as such and expel others to be in the same league as what Russia has done. Whether it's because they aren't strong enough or some other reason, they haven't. So we shouldn't treat China like they've already taken these steps.

Second, we need a more realistic recognition of the international system and norms. Yes, there are rules and norms on security, economics, and human rights. States have the right to self-defense, but they shouldn't invade or militarily coerce others. There is a multilateral economic system that encourages free trade and the flow of capital. And states should treat their own populations humanely.

But the actual "rules of the road," now the Obama Administration's favorite phrase, are relatively ambiguous. What constitutes military aggression, unfair trade practices, and human rights violations aren't always so obvious. In addition, the United States itself doesn't consistently abide by these norms. The US uses its military power outside its own borders far more than any other country in the world, often unilaterally and without UN approval. It is not a signator to the Law of the Sea Convention and is found in violation of WTO rules as often as any other country. And the US engages in cyberwarfare and Internet surveillence certainly as much as China, if not more. And for anyone who thinks US intelligence agencies don't help US industry as a result of these activities, I've got some property in Florida and Erdos to sell you.

Third, I can't be sure about how Russia defends its actions, but in just about every case I'm aware of, China places its acts in the context of existing rules and norms. Sure, in many instances these are self-serving interpretations, but they are consistently framed in these contexts. China cites the Law of the Sea convention when it suits its interests and cites "historical" claims when it does not. China did not invent the idea of an Air Defense Identification Zone (ADIZ), but borrowed the idea from the US and others. China now uses the fair-trade rules, such as antidumping, in the same way US industry has done so for decades.

In sum, we need to stop being so naive about what the real rules of the road are, especially for large powers. Russia and China may be challenging the US's dominant position, but the US is not a synonym for "world order." If you want to pick sides in these contests, just don't be fooled that you're picking between a fair, open, and peaceful system and a hierarchical, coercive, and brutish system. There are already many aspects of the latter in our current world order. Even as Russia's revival and China's rise are leading to a realignment of the balance of power, this shift is not undermining the basic structure of the international system but reinforcing it.

All of the above does NOT mean I approve of what Russia and China are up to. Actually, quite the opposite. Just focusing on the PRC, I think China's coercion against its neighbors is deplorable. Many of its economic policies that are polluting its environment, sickening its people, and threatening the planet are shameful and should be changed. Its approach toward the Internet and willingness to put aside human rights conerns in favor of protecting the state go against what would be in the country's true interests. But most of these policies and appoaches are being taken within, not against, the current world order. And so if we want the Chinese to change, we should stop lecturing them about norms and instead actually reconsider and address weaknesses and ambiguities of the current system. The Chinese are no longer going to change their ways simply because the US or anyone else says what they're doing violates international norms. We need a new approach that is more realistic about how the world actually works and what kind of world we want.

December 05, 2013

Vice President Biden is completing his visit to China as part of his broader trip through the region. Although China's announcement of a new Air Defense Identification Zone (ADIZ) has dominated the headlines and been a central part of the discussions everywhere he goes, he has addressed a great many issues during the past several days.

I'm particularly struck, though, by the sweet and sour mix of his meetings with Xi Jinping. They in a nutshell embody what may be enduring elements of the broader US-China official relationship.

On the sweet, positive side, there was genuine, sustained personal engagement and substantive back-and-forth. The briefing by a US official stressed how good their personal relationship is and how they talked broadly and strategically about many issues in ways that did not simply sound like negotiations. This is a huge improvement over the interactions during the 10 years of Hu Jintao's leadership. He never deviated from the the cue cards.

Second, the Chinese and Americans aren't letting disagreements on some issues hold the entire relationship hostage. The ADIZ problem isn't stopping cooperation in other areas the way a crisis would've put everything else up in the air, at least temporarily, as in the past, e.g., the 1995-96 Taiwan Straits Crisis and the May 1999 embassy bombing. The two countries are collaborating bilaterally, regionally, and globally on a host of issues. For example, in the midst of these regional events, the Chinese are in Bali at the WTO ministerial, and they've been sufficiently cooperative for there to be a deal. The recalcitrant party is India, which is opposed to a deal for ideological reasons.

And third, the disagreement over the ADIZ is being contested through international rules and their different interpretations. China did not draw vague lines in the western Pacific and start shooting willy nilly. Instead, they studied assiduously about precedents regarding ADIZ's in other countries (22 other countries have ADIZs). They gave very precise geographic coordinates, developed a justification, and are seeking recognition of its existence by others as a basis for their sovereignty claims. Of course, the Chinese are trying to change the facts on the ground (and we should expect other ADIZs before too long), but the attention to international legal frameworks is significant and now commonplace in just about everything the Chinese do.

On the other hand, the relationship has some sour, negative dynamics. Good personal atmospherics didn't stop Xi and Biden from articulating differing positions across a range of issues, from the ADIZ to cyber to human rights. The US and China have narrowed their differences on many issues over the years, but there may be hardwired limits to how much overlap there is in their interests. The two countries compete economically and for strategic influence, and they have different values regarding human rights.

Also, although the two sides are able to compartmentalize and keep problems from bringing the entire relationship into doubt, one does wonder on what issues the US is willing to draw a line. The US is willing to bring cases to the WTO, stop individual Chinese investments it finds threatening, speak out on individual human rights violations, critique specific Chinese military actions, and engage in its own "rebalacing" effort. On the one hand, this represents a cautiously optimistic hedge strategy in which the US promotes cooperation wherever possible but simultaneously deals with areas of disagreement in a forthright manner. But I do wonder sometimes if this is tactically wise and strategically foolish. The bet from the US side is that extended engagement is socializing the Chinese to accept current international norms, but to use a football metaphor, it may be that the US is just gradually and imperceptably giving away field position as China advances downfield. China's bet may be that the US gradually declines and its willingness to defend allies and its own interests so far from the US mainland declines. (Take a look at the most recent polls on the growing isolationism of many Americans.)

Which brings us to the third point. The US has been focused on encouraging China to follow international rules and norms, expecting that compliance in and of itself will make China a status quo power. But the rules don't just promote cooperation; they are also used for competition. And China's greater attention to the international rules of the game is making it a better player at the game. They still do not have the reputational stripes of the US and Europeans, or even the Brazilians, but just because the game has moved from the streets to court houses, press rooms, legislatures, and negotiating tables house doesn't mean competition is going away.

The cumulative result of all of this is a complex relationship characterized by simultaneous cooperation and competition, extensive interaction and communication yet sustained disagreements, and a greater use of legal and regulatory tools on both sides as part of this competition. Such a relationship is competitive, but the extent of interdependence and the location of engagement is quite different than that between the US and Soviets. Perhaps we are in for a long sweet and sour era of lukewarm peace.

October 21, 2013

The New York Times is running a story about the rise of China's global arms sales. They were prompted by China's large deal with Turkey, a NATO member. Yes, Chinese sales are up, to around $2.2B per year, and they're gradually moving up the value-added chain to sell more sophisticated stuff. It's a story that sounds similar to the civilian sector, where extensive state support puts China in a position to undercut the US and other advanced economies. And given that the most recent sales are to a NATO member, this could force a wedge into the alliance.

Yes, all true, but the Times has ignored what the real public interest is in Chinese arms sales, and in fact, with arms sales in general. The real problem is not about growing Chinese competition; the real worry we all need to pay attention to and get control of is how large the global arms business is in the first place. This $72B industry fuels wars and destruction, and is destabilizing.

The most alarming part of the story is not China's rising market share, but that the Chinese see that arms exports and selling more advanced products are, as one Chinese observer put it in the story, a "very normal phenomenon." The US has socialized China to see the arms business as something every great power should be involved in, not to mention that it can be quite lucrative. From a public-interest perspective, that is not the lesson we should be teaching China. And it will come back to haunt us, in additional conflicts and in conflictings lasting longer than they should.

This socialization process has occurred across the spectrum, and includes "teaching" China about the global rules of international trade, protecting the environment, regulating financial markets, and many other areas. Although many areas of this "education" are positive and commendable, others are downright dangerous and against the public interest. This includes the global antidumping regime, weak regulation of financial markets, inadequate controls on pollution, and other areas. Weapons are not any ordinary product; their sales need to be controlled and made far more transparent than is now the case. For another area where the US trade policy has run amok, look at the Obama administration's advocacy for reducing countries' abilities to limit tobacco sales.

By the way, as the Times reports, the US controls 39% of the global arms market, or $29B per year, still far higher than any other country. So don't cry me a river that they're suffering at the hands of the Chinese.

If this were a story about the domestic US weapons market (or cigarettes), you can be darn sure the Times wouldn't have fallen for this. They wouldn't ever write a sympathetic story -- and put it on the front page -- reporting that a major gun manufacturer such as Smith & Wesson is facing an unexpected challenge from a new up-and-coming handgun producer, and that such a trend is threatening to the incumbents. That kind of story would sound like something pushed by the National Rifle Association (NRA) or be reported in a bland way by Fox News, not the Times.

The Times has unwittingly become an advocate for the US defense industry, the gun lobby, and the global arms market in general. We should all recognize this and be appalled.

November 07, 2012

The winds are blowing West, and this is good for US-China relations and addressing global problems.

Why am I more than cautiously optimistic?

The "feeling out" period often associated with new administrations will be much shorter and less bumpy than had Romney prevailed. Secretary Clinton and perhaps some other cabinet secretaries will likely step down in the Spring, but there should be substantial continuity in personnel. More change will come on the Chinese side, but most of the new leaders have already been on the scene and engaged with the US and international affairs for some time. The main adjustments will be adapting to Xi Jinping's style and the new slate of members on the Central Military Commission.

The victory allows Obama to carry out his domestic policies with renewed vigor. Although Obama did not win a clear policy mandate, and the House of Representatives is still in Republican hands, he and the Democrats performed impressively. The economic recovery is likely to continue and improve, and the US's long-term demographic transition is likely to benefit the Democratic Party. There will be tremendous pressure on the Republican Party to give up its strategy of opposing Obama at every turn. Hence, we should see a rollback of the Bush tax cuts, full implementation of Obamacare, and greater attention to US industrial competitiveness.

Obama's policies toward China and East Asia will continue along the same trajectory developed over the past few years. Aside from token criticism of Obama's weakness vis-a-vis the Chinese curency, Romney and the Republicans had very limited critiques of Obama's foreign policy (see the second debate). The 60-plus official bilateral fora for dialogue and cooperation will continue. At the same time, the US will proceed with using the WTO and bilateral antidumping and counterveiling duty investigations as a way to push Chinese economic policies to be less harmful to US business interests. Efforts to adopt a Trans-Pacific Partnership will continue apace and perhaps with a greater PR campaign. The US will continue to highlight the importance of freedom of transit and the peaceful solution of territorial disputes in the South China Sea and expand cooperation with countries on China's periphery. And without the specter of another election, Obama may be more willing to engage multilaterally for a mini-Doha package and a substantive deal on climate change through the UN process.

China could be on the defensive for the next few years. In early 2009, because of the global financial crisis, Obama began his presidency in a weakened position, and China's star seemed to be rising quickly. Now things look different. It is the US that is resurgent, and there are serious concerns about China's economy, in the short term due to substantial growth in debt, and in the medium/long term due to the difficulties of shifting toward a more efficient economic growth model. Although there are understandable concerns about a flair-up with Japan, I don't expect China to assume a nationalistic defensive crouch during this period. That is because the likely new Politburo Standing Committee will be relatively reformist in character, closer in temperment to the group in power in the 1990's (not surprisingly, Jiang Zemin has had a big hand in shaping the incoming group). I expect the new Chinese administration to adopt policies that help China gradually overcome many of its economic challenges (although I don't see democratic reform on the horizon). In the near term, these problems may be serious enough to constrain China's assertiveness.

In March 2012, Kenneth Lieberthal and Wang Jisi issued an important report highlighting the strategic distrust that has seeped into the relationship. I do not see that distrust dissapating easily and replaced by a straightfoward, uanbashed partnership. However, I do think the continuity of leadership on the US side, the potential greater US confidence domestically and internationally, combined with serious challenges in a China headed by a more reformist leadership may create an environment for greater cooperation. The US may be more ready to compromise on some aspects of the Doha Round and climate change, and China may need a more stable periphery and explicit support in a way it hasn't shown of late.

Thus, in multiple ways, there is a chance to re-live the 1990's all over again, but this time get it right. When the Clinton Administration came into office, the US had vanquished the Soviets and Iraq. It took over a year for the president to drop the "Butchers of Beijing" rhetoric and extend MFN to China without condition. The relationship improved somewhat, but was still hit by the Taiwan Straits crisis and the mistaken bombing of the Chinese embassy in Belgrade.

More broadly, although the Clinton Administration got the US economy rolling again (or at least supported trends eminating from Silicon Valley and elsewhere), signed NAFTA, and got the WTO launched, more could have been done in terms of addressing climate change, limiting nuclear proliferation, enhancing mechanisms of cooperative security, and adopting policies that really fostered economic development and state-building in developing countries. That agenda was cut short by the Bush victory in 2000 and 9/11. We can't erase those 8 years, but it's possible the Bush era could be seen as an interregnum, a pause taken to deal with immediate threats that pushed back addressing deep-seated, long-term global challenges.

And if China is entering a period where they recognize a new wave of domestic reform is needed, then we really could be back in a similar situation. Of course, we cannot unwind the 2000's -- the threat of Middle East terrorism, the damage to the US economy, and China's emergence -- but with Obama repeating Clinton's successful re-election bid, it does feel a little like 1996.

And if you listen, you can hear Celine Dion singing her hit of the year, "Because You Loved Me."